Banking - Yojana

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Generated by PDFKit.NET Evaluation Structure of 'WorldInsurance P V Nishanth and Anindita Mitra The insurance. industry has shown signs of development consequent to economic growth' including industrial and other activities of world economies~However, the spread and development of the insurance business is dominated by afew industrially developed economies. It is necessary to popularize insurance in countries like India, China and Africa wher~most of the world ~poor inhabit. THE WORLD insurance . industry recorded growth since it was founded. The earliest reference to insurance was found in Babyionia, Greece and Rome. Since then there has been a rapid growth in total insurance business throughout the world. It wasdeveloped and spread its wings widely in the most developed countries of the world, and now it has been observed that the awareness of insurance has spread to the developing countries as well who also contribute to the world demand for insurance. Since the less developed coun tries have limited development of markets for saving, credit and insurance and heavy production risks are involved in the major activity of agriculture, these take an active role in banking and insurance. America and Europe together contribute more than 90 per cent of the total wo'rld insurance business in terms of premium in'come. Life insurance business accounts for the bulk of the total insurance business, 79 per cent in Asia, 45 percent in Latin America and 40 percent in other continents. Thus average life insurance business (US $1321 billion) was65 per cen t of the total insurance business in the world in 1999. The Asian life market recorded 7.5 percent-real growth and constituted 43.59 per cent of Table 1 Structure of World Insurance world wide premium income in the life sector. Table 1 shows that insurance industry recorded a growth in premium volume (US$ 2082 billion) of around seven percent in 1999 over the previous year in real terms. , Premium income (US $ billion) Continent Total Insurance Business Life Insurance Business ~ 1990 1995 1999 1990 1995 1999 North .America 483 514 700 203 222 352 (39.87) (37.95) (33.93) (31.97) (27.54) (26.36) Europe 375 460 591 182 239 347 (31.03) (33.93) (28.64) (28.79) (29.65) (25.99) Asia 311 334 728 228 322 582 (25.70) (24.64) (35.28) (36.02) (39.95) (43.59) Africa 13 14 18 8 9 12 ( 1.09) 0.06) (0.87) (1.26) : (1.12) (1.65 ) Latin America 7 . 10 22 2 2 10 (0.58) (0.57) (0.19) (0.32) (0.25) (0.75) Oceanic 21 24 23 11 12 18 (1.75) (1. 77) (1.07) 1.69) (1.49) (1.64) World 1210 1356 2082 634 806 1321 Source Note SIGMA; Swiss Re, 2/91, 4/922,5/95 Figures in parantheses refer the percentage share in world total. Mr PV Nishanth is M.Phi! Scholar, and Anindita Mitra is Guest Faculty, Deptt. ofEconomics,Pondicherry University, Pondicherry. 10 YOJANAJuly2002 Click here to unlock PDFKit.NET • •
Generated by PDFKit.NET Evaluation • The insurance industry has shown signs of development consequent to economic growth including industrial and other activities of world economies. However, I the spread' and development of the insurance industry is unevenly distributed across the regions. The world insurance business is doininated by few industrially developed economies. This dominance can be seen from the market share of industrial economies in Table 2. It is noticed that 80 per cent of the total and life insurance market is shared by the top six industrial economies such as the United States (US) ,Japan, Germany, Great Britain, France and South Korea. Similarly, though the Asian region accounts for 34.84 percent of the total insurance business in 1993, among the Asian countries, Japan alone contributes 30.36 percent. The developing countries hold.a very small share in the international insurance market. China and India, the potential markets, together account for less than one per cent. The unequal development of insurance from the meagre share of developing countries in the world insurance market is given in Table 3. Further, different regions and specific cOl;lntries recorded • altogether differen t performances. It is important to note that the contribution of the less developed countries (LDC's) share in the world insurance business mostly comes from the Asian LDCs. Therefore, it is clear that the industrially advanced regions dominate the world insurance market both in life and non-life insurance. The reason for this skewed development of insurance business is that there is a positive YOJANAJuly.2002 Click here to unlock PDFKit.NET Table 2 " : World share of Largest Insurance Market in 1995 (Per cent). Source: SIGMA: Swiss RA~ 2/91, 4/92, 5/95 . ., Total Insurance Life Insurance Country Rank World Share Rank World Share Unite States 1 31.31 2 23.82 Japan 2 30.36 1 42.61 Germany 3 6.44 5 •.4.54 Great Britain 4 6.15 3 7.05 France 5 5.27 4 5.67 South Korea 6 2.12 6 2.95 China 23 0.30 'l "" 26 0.'16' .. ... , . India 25 0.26 20 0.32 Table 3 Developing Countries Share in World Insurance B~ines~ Total Insurance Life Insurance Regions Business Business 1995 1999 1995 1999 Developing Countries 4.95 6.56 4.68 6.26 Mrica 0.74 0.36 0,20 ,0.10 Asia 3.86 4.61 3.29 4.39 Latin America 0.94 0.90 0.39 0.42 Source: SIGMA, Swiss Re, 4/90, 2/91, 4/92; and UNCTAD,January 1995., correlation between economic development of a country and the ,amount people spend on insurance. It is substantiated by examining the life insurance standard in terms oflife insurance density and penetration. From the cross country analysis, it is evident that the developed countries have a far more developed insurance business compared to the LDGs. The high life insurance penetration (the incom'e elastici ty of life insurance) indicates that they have a high amount oflife insurance per head compared to the LDC (Table 4.) Indian Scene India's position is far behind the developed countries but reasonably good compared to other LDCs with a real growth higher than both groups. Among the develope'd counttie's', life insurance penetration is found to be the highest in Japan (2252.49 per cent) followed by United States (US) (1928.66), while'the life insurance density is found to be the .highest in South Korea (19.45) and the least in US ($3.79). In developing countries on the other hand, Chile showed the highest life insurance penetration which was 33.80 percent while China had the lowest which.wa~just 0.53 percent. India was next to Philippines with 5.60 percent penetration. On the other 'hand; life insurance density was the highest in Zimbabwe ($3.3'4)' and $1.11 in India. The lowest density was found in China which wa~ $0.18 only. . Most countries, whether developed or developing and where-.state _iind. priv;He' insun::rs
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